African Capital Markets News » Impact Investing

Robin Hood tax on financial transactions proposed for fight against AIDS

Tom Minney — Mon, 26 Jul 2010 20:48:19 +0000

Activists are calling for a tax of 0.005% on all financial transactions worldwide, to raise some $33 billion dollars per year for development and particularly to replace dwindling funding for life-saving AIDS drugs. Protestors at the world AIDS forum in Vienna on 21 July said a “Robin Hood” tax on financial transactions would be one of a series of new funding initiatives, and said the time is right to propose it ahead of a review summit on Millennium Development Goals in September and a G20 meeting in November.
Funding from by rich donor nations to poor countries fighting HIV and AIDS fell back in 2009 to $7.6 billion, from $7.7 bln in 2008. The turnaround set alarm bells ringing for tens of thousands of people in Africa who are kept alive through expensive courses of ART drugs. Cutbacks could be a death sentence.
The 2009 decline ended 6 years of increases averaging more than 10% a year. The Global Fund to fight AIDS, Tuberculosis and Malaria is seeking $17 bln in pledges for 2011-2013, compare to total funding of $1.2 bln for anti-HIV drugs and other initiatives in 2002.
According to news reports, campaigners at the AIDS forum said it was time for innovative financing solutions for development. Dr Philippe Douste-Blazy, former French Minister of Foreign Affairs and Special Adviser on Innovative Financing for Development, said: “It is up to us to explain to the Heads of State that that they do not have any other solution because we know it only depends on political will.” His organisation UNITAID (www.unitaid.eu) has implemented a small tax on airline tickets. In its first 2 years of existence UNITAID committed $730 million of fresh funds to tackle HIV and AIDS, malaria and tuberculosis. A portion of thoe funds came from low- and middle- income countries, mostly through the air tax mechanism. UNITAID, in partnership with the Clinton Health Access Initiative (www.clintonfoundation.org) has stimulated the manufacture of new medicine formulations as well as funded an integrated package of care for HIV-positive children.

Jacana makes first investment, into Kenya’s InReturn Capital

Tom Minney — Wed, 07 Jul 2010 11:53:18 +0000

A UK-based investment and advisory firm concentrating on African venture capital managers has announced its first investment. Jacana Venture Partnership (www.jacana.org) on 29 June announced that it will invest in InReturn Capital (www.inreturncapital.com), a Kenya-based firm investing in East African small and medium enterprises.
Jacana’s aim is that by promoting a thriving venture capital industry in Africa it will enable small- and medium-sized enterprises (SMEs) to grow and help millions out of poverty through economic development and job creation. Jacana’s unique offering of capital and expertise will enable InReturn to reach its goals more rapidly. Access to finance is a major obstacle to the growth of African businesses.
According to Jacana’s mission statement, SMEs are a crucial driver of economic development in Sub-Saharan Africa. Every $1 invested in an SME generates an additional $10 in the local community and $1 of SME finance creates 3 times more jobs than an equivalent investment in microfinance.
International investors are increasingly interested in Africa but find it hard to choose SME fund managers in the target country since they often lack track records. Jacana mitigates this risk for investors by selecting high-quality teams and providing intensive support to local fund managers through a network of expert mentors – highly experienced private equity and venture capital professionals who can provide hands-on support to local teams. Stephen Dawson, Jacana’s Chairman, has over 30 years’ experience in UK private equity and is already actively involved with InReturn’s deal team in Nairobi.
Jacana selected InReturn as its first local partner because of its strong team and deal pipeline, after an extensive market review. InReturn’s East Africa Fund (target size $20 million) invests in SMEs in East Africa. The capital invested in InReturn’s business will support the expansion of the team into Tanzania and Uganda.
InReturn contributes to the profitability, sustainability and growth of the companies that it invests in through the active participation of its local investment team of 5 Kenyan and European professionals. InReturn East Africa Fund maintains a network of investors in Western Europe and has extensive financial and management experience.
Anthony Gichini, Managing Partner for InReturn Capital in Nairobi, said “Jacana’s investment of capital and expertise will help us to accelerate our business, and deliver returns to our investors as well as development impact in East Africa. Tanzania and Uganda are important markets for InReturn and we see significant opportunities to expand our team into these countries as we build our business together with Jacana”.
Jacana’s expertise, provided through its network of private equity expert mentors, will help InReturn to execute high-quality transactions and raise additional capital from international investors, using Jacana’s extensive contacts in the industry. Together, Jacana and InReturn aim to deliver attractive financial returns to investors in the fund, grow the private equity industry in Africa and thereby support the sustainable development of SMEs, leading to significant job creation in Africa.
Simon Merchant, CEO and co-founder of Jacana, commented in a press release: “This is the first step in growing our network of African partners, supported by international private equity experts. We are delighted to be working in close partnership with InReturn and look forward to supporting this excellent team in making successful SME investments in East Africa.”
Jacana aims to select the capital managers with highest potential growth for inclusion in the partnership network and then to work closely with them to create an attractive investment opportunity for international investors. Jacana is talking to several candidates for its next investment.

Consensus Business Group launches $92 million “clean tech” fund for Southern Africa

Tom Minney — Thu, 17 Jun 2010 21:44:56 +0000

South Africa’s first, specialised, private equity clean technology fund, Evolution One Fund, has reached its final closing after raising R700 million (US$92 million) from local and foreign investors, including development finance institutions, a family office and sovereign wealth funds. This capital is to be invested into equity in clean technology projects and enterprises including new energy and environment focused technologies in South Africa and across the Southern African Development Community. Evolution One will concentrate on long-term equity and equity-related investment based on active management and adding value after investing.

The fund will prioritise investments in expansion capital but will consider earlier-stage environmental infrastructure projects when there is clear evidence of early revenue streams and profitability. The fund will also invest into proven technology or projects that clearly demonstrate market adoption. The minimum investment size is R10 million ($1.3 million) and its maximum investment is R100 million into any one project or technology.

Consensus Business Group (www.consensusbusiness.com), the London-based advisor to The Tchenguiz Family Trust, has played a leading role in establishing and advising the fund. Consensus owns or manages 300,000 UK residential units and £4 billion of commercial properties, as well as extensive “clean tech” investments. As founding cornerstone investor, Consensus has secured the participation of 7 other leading international organisations.

Vincent Tchenguiz, Chairman of Consensus said: “We have extensive experience and a long track record in global clean technology investing and this has given our partners the confidence to join with us in setting up Evolution One in South Africa. We are delighted to have successfully achieved final closing of this ground-breaking fund.

“Evolution One Fund is the first dedicated clean technology private equity fund to be established for Africa and its value proposition is to bring Consensus’s active financial modelling and specialist insights together with expertise to projects and technology enterprises in South Africa and the SADC region. In addition, the investment capital of this network of leading investment institutions inherently leverages access to specialised knowledge and skills in the broader global clean technology sector.

“The Fund is advised by a fund management team comprising 9 principals and analysts who collectively bring their unique breadth and depth of commercial, financial and sustainability credentials. This is combined with strong black empowerment credentials and the ability to structure broad-based black economic empowerment transactions.”

Consensus is joined in the Evolution One partnership by IFC, a member of the World Bank Group; the Finnish Fund for Industrial Cooperation (Finnfund); the Swiss Investment Fund for Emerging Markets (SIFEM); fund of funds the Global Energy Efficiency and Renewable Energy Fund (GEEREF- www.eif.org), a compartment of the European Investment Fund; the African Development Bank (AfDB); the Norwegian Investment Fund for Developing Countries (Norfund); and the Industrial Development Corporation of South Africa (IDC).

The local South African fund advisor is Inspired Evolution Investment Management (IEIM – www.inspiredevolution.co.za), which aims to support and guide target invested companies and provide long-term capital growth. The Evolution One fund is a 10-year fund is committed to investing into clean technologies in the new energy and environmental sectors, including cleaner energy generation such as wind and solar energy, and energy efficiency, cleaner production and more efficient manufacturing processes, air quality and emissions control, water quality and resource management, waste management, agribusiness, natural products and materials and related services for sustainable buildings.

Michael Brooks, CEO of IEIM, says the fund management team has already appraised numerous deal opportunities and within weeks would announce details of the first 3 investments to be undertaken by the fund: “In the past 2 years we have seen significant positive shifts in the commercial thinking underpinning the roll out of clean technology projects and enterprises, both within the public and private sectors.

“The South African government’s recent adoption and implementation of the Renewable Energy Feed-in Tariffs and Co-Generation Feed-in Tariffs are evidence of the state’s support for regulatory drivers to underpin the development at scale of commercially viable renewable energy projects here and in our neighbouring countries. We are currently actively engaging with a range of promoters of clean technology enterprises and with developers of renewable energy projects.”

The first close of the fund was announced in July 2008 when $54 million had been raised from the initial 4 investors: IFC, Castleway Properties (owned by Tchenguiz Family Trust), SIFEM and FinnFund.

Africa Sustainable Investment Forum launched

Tom Minney — Sun, 13 Jun 2010 08:56:02 +0000

A top line-up of speakers from the financial community launched the Africa Sustainable Investment Forum (AfricaSIF- http://www.africasif.org) on 9 June at the Johannesburg Stock Exchange (www.jse.co.za).
Speaking at the launch, AfricaSIF co-founder Graham Sinclair said it is a strategic new step in facilitating investment in Africa that purposefully integrates environmental, social and governance (ESG) factors: “Africa needs capital, but it does not benefit from capital that does not develop our continent sustainably. AfricaSIF aims to attract new capital in new ways to Africa and help to grow sustainable investment on the continent by taking a long-term interest in Africa’s economic development.
“2010 is set to be a landmark year for Africa. With the world’s eyes on the FIFA World Cup kicking off in SA in just two days’ time, massive infrastructure development is taking place and the knock-on effects for the economy and business are immense. Africa has about the same number of potential consumers as India or China. After 40 years of sub-par growth, Africa’s GDP grew at 5% for five straight years from 2002, putting Africa back on the global investment radar.”
AfricaSIF describes itself on its website as “a network, knowledgebase and advocate for sustainable investment in Africa. We are currently developing an independent, pan-African not-for-profit network of investment practitioners promoting sustainable development on the continent by attracting investment in the public, private and philanthropy sectors across asset classes, countries and stakeholders from the platform at africasif.org.”
Speakers at the launch included Jay Naidoo (Chair of both Development Bank of South Africa and Global Alliance for Improved Nutrition), Judge Mervyn King (Chair of the Global Reporting Initiative and King Commission), Simon Harford (Partner: Africa, Actis), Tim Turner (African Development Bank Director), Corli le Roux (Legal Counsel for the JSE), Wanjiru Kirima (Chairperson of the Principal Officers’ Association) and JP Fourie (South African Venture Capital Association).
“AfricaSIF is a pioneering network which believes in the triple bottom line of people, profit and planet,” said Simon Harford, whose company Actis has over 60 years’ experience of private equity in Africa. “AfricaSIF’s work lays the foundations upon which strong, long-term and sustainable businesses are built.”
“This initiative launched at the JSE will create a network of best practice on ESG factors in investment for the continent,” said AfDB’s Tim Turner.
Sinclair adds that analysis in March 2009 indicates approximately $6.9 trillion, including $300 billion in emerging markets was invested integrating ESG factors, but wonders how much of this is in Africa. “AfricaSIF will provide services and opportunities for our members to work together to align investment profitability with social and environmental responsibility in Africa. We are also working on the first ever report on the state of sustainable investment in Africa, scheduled for release in December 2010,” he says.
AfricaSIF was hosted at Africa’s largest stock exchange to emphasise the practical nature of AfricaSIF, a network as a meeting place for the whole investment value chain, attracting capital to sustainable businesses across asset classes.
“The over 400 members of Principal Officers Association are asset owners that are increasingly driving alignment of their fund managers and service providers toward the sustainable investment theme. AfricaSIF is a new element of the investment ecosystem that will play a vital catalytic role across Africa in accelerating this process,” said Wanjiru Kirima, chairperson of the Principal Officers’ Association and AfricaSIF co-founder.
“Our members are actively seeking opportunities to deploy investment in clean tech and other sustainability themes in Africa”, said SAVCA’s JP Fourie. “We look forward to working with and in the AfricaSIF network”.
Further launch events are scheduled to take place in Cape Town end June, Lagos, Nairobi, Cairo/Tunis, Geneva, London, Paris, New York and Boston. The first annual AfricaSIF conference, ESG Africa, is in partnership with global ESG specialist journal Responsible Investor (www.responsible-investor.com) and other partners, and scheduled for December 2010.
With thanks to African investor (http://www.ainewswire.com).

SA listed companies have to integrate sustainability reports

Tom Minney — Wed, 09 Jun 2010 07:57:57 +0000

South Africa’s JSE stock exchange (www.jse.co.za) is requiring listed companies to integrate their sustainability reports with their annual reports, with effect from this month. According to a report in Business Day newspaper (www.businessday.co.za) Mervyn King, chairman of the King committee and a leading expert on governance, said: “SA is among the first countries in the world to require integrated reporting of listed companies. This puts us ahead of the game.”
The newspaper says there are still no set standards for companies’ integrated reporting, and Mr King will chair a new Integrated Reporting Committee to issue guidelines on good practice in integrated reporting.
The King Report on Corporate Governance in South Africa 2009 (King III) includes an integrated report disclosure checklist, effective March 2010, according its publication by Ernst & Young. Companies should apply this, or explain why they feel it approroriate not to apply or to apply it differently (“apply or explain”). An integrated report should contain “adequate information on the operations if the company, the sustainability issues pertinent to its business, the financial result and the results of its operations and cash flows”.
Jayne Mammatt, an associate director in governance and sustainability at Ernst & Young, was cited in the newspaper saying an integrated report should evaluate all areas of performance, including economic, social and environmental issues. It was not sufficient for companies to provide wordy platitudes and vague estimates, Ms Mammatt said. It cites a 2009 study by Ernst & Young showed that only a handful of 3,000 sustainability reports around the world were integrated.
Mr King is quoted as saying: “The corporate identity of companies has changed and so reporting has to change. Stakeholders need to make informed assessments about the longer-term sustainability of a company and that it is operating as a responsible corporate citizen.” The requirement is likely to make more work for companies.
The founding organisations of the committee include the Association for Savings and Investment SA, Business Unity SA, the Institute of Directors SA, the JSE and the South African Institute of Chartered Accountants (Saica). Graham Terry, Saica’s senior executive of strategy and thought leadership will chair a working group whose first task will be to develop a framework for integrated reporting.
Leon Campher, CEO of the Association for Savings and Investment, was quoted saying the project was considered a priority initiative, given the volumes of annual reports generated by the association’s members. “We have 153 member companies managing in excess of R2,5-trillion of assets. Integrated reporting will facilitate more holistic and meaningful reporting of financial results, enabling shareholders and clients to gain a better understanding of a company’s triple bottom line.”
Freda Evans, chief financial officer of the JSE, was quoted as saying: “Reporting on the financials alone is no longer sufficient, as all aspects of the business – environmental, social and governance aspects – affect the company’s bottom line.”
Saica CEO Matsobane Matlwa was cited: “Corporate reporting is entering a new era. Shareholders and other stakeholders need broader information to enable them to make more informed decisions about a company. This does not necessarily mean more detail, but greater insight into the strategy, risks and value creation of the company.”

First meeting of Global Impact Investing Network (GIIN) Investors’ Council

Tom Minney — Tue, 11 May 2010 06:01:51 +0000

The Global Impact Investing Network (GIIN – www.globalimpactinvestingnetwork.org) has held the inaugural meeting of its Investors’ Council, bringing together leading global impact investors, who use for-profit investment to address social and environmental challenges. The meeting was held from 26-28 April in New York. The agenda covered broad industry issues, such as impact measurement and lessons from the microfinance industry, as well as more specific strategies including community bank deposits and trade financing.
The GIIN Investors’ Council is designed to help active impact investors learn from one another and increase the scale and effectiveness of their initiatives. More than 25 member organizations attended this event. They represent different financial institutions including specialized banks, targeted impact funds, large-scale family offices, private foundations and institutional investors.
Camilla Seth, Director of Programs and Operations at the GIIN says: “Impact investing has drawn increasing attention over the last year, and this meeting was the first opportunity for the leading practitioners to collectively address the opportunities and challenges faced by the industry.
“The GIIN and its Investors’ Council members share a belief that through collaboration we can achieve better and bigger results.. these impact investing leaders productively discussed how to broadly accelerate the pace of impact investment, increase the creativity, ambition, and scale of the approaches undertaken, and improve our understanding of the real social and environmental impact of these investments.”
The GIIN Investors’ Council was launched in September 2009 as a core programme to provide a global collaboration platform to expand learning about new investment opportunities, facilitate sharing lessons learned, highlight and disseminate best practices, and enable opportunities for collaboration and partnership among members. As leaders in the industry, Investors’ Council members are also engaged in developing tools and other resources aimed at serving the broader impact investing industry.
The GIIN Investors’ Council has 30 members: Acumen Fund, Annie E. Casey Foundation, Armonia (Lunt Family Office), Bill and Melinda Gates Foundation, Calvert Foundation, Capricorn Investment Group, Citi Foundation, Deutsche Bank, DOEN Foundation, Equilibrium Capital, Gatsby Charitable Foundation, Generation Investment Management, Gray Ghost Ventures, IGNIA, J.P. Morgan, Leapfrog Investments, Lundin for Africa, National Community Investment Fund/ShoreBank Corporation, Omidyar Network, Prudential, Rockefeller Foundation, Root Capital, Sarona Asset Management, Skoll Foundation, SNS Asset Management, TIAA-CREF, Trans-Century, Triodos Bank, W.K. Kellogg Foundation, and Wolfensohn Fund Management.
The GIIN is a not-for-profit organization dedicated to increasing the scale and effectiveness of impact investing by building critical infrastructure and supporting activities, education and research to help accelerate the development of a coherent impact investing industry. The GIIN is also overseeing the development and adoption of the Impact Reporting and Investment Standards (IRIS), a common vocabulary and framework for measuring and reporting the social and environmental performance of impact investments.

Private equity firm joins responsible investing

Tom Minney — Wed, 24 Mar 2010 01:29:37 +0000

Private equity fund manager Aureos Capital (www.aureos.com) has signed up for a UN-backed globally recognized initiative to promote responsible investment. Aureos specializes in investing into small to medium-sized businesses in emerging markets and it recently signed up to the United Nations Principles for Responsible Investment (UNPRI) initiative.
UNPRI (www.unpri.org) was established in 2005 by 20 of the world’s largest institutional investors. There are currently over 700 institutional investors, investment managers and professional service partners who have signed up to the Principles. It reflects the core values of investors who take a long-term view to the realisation of value from investments. This makes it particularly suitable for Private Equity investors, whose investment portfolio horizons are generally medium to long term.
Since its establishment in 2001, Aureos has increased its funds under management to over US$ 1.2 billion and extended its geographical footprint to over 50 emerging markets covering Asia, Africa and Latin America, by establishing 16 regional private equity funds. In a company announcement on Tuesday (23 March), it said it has long been committed to sustainable investing.
Aureos uses its network of professionals to ensure Environmental, Social and Governance (ESG) factors are integrated and it has extensive experience investing in Latin America, Africa, Asia and the Pacific to enhance the long-term value of portfolio companies.
Sev Vettivetpillai, Chief Executive Officer of Aureos Advisers Ltd, comments: “Our proactive approach to the consideration of ESG in portfolio companies and the communities in which they operate aligns commercial objectives with lasting development impact. We are successful in our approach through our partnership with our investors, employees, entrepreneurs and the people in the regions in which we operate.”
“Adhering to the principles of responsible investing is all the more important in emerging markets where there is often less regulation governing the impact of companies on the environment, or less enforced corporate governance standards.”
“We believe there is a positive correlation between the rigorous application of high ESG standards and financial returns for investors. It is a matter of mitigating investment risk. We are thrilled that these principles are now promoted by an institution with the global standing of the United Nations.”
The UNPRI is currently involved in a two-year promotional project in emerging markets. Aureos plans to spearhead a new drive promoting UNPRI’s credentials and addressing the G20’s recent commitment to financing small and medium-sized businesses in emerging markets.
Sev Vettivetpillai says: “Investing in SMEs in emerging markets is our key activity so we are delighted to be working with the UN to promote this.”
Principles include:
• Incorporating environmental, social, and corporate governance (ESG) issues into investment analysis and decision-making processes
• Being active owners and incorporating ESG issues into ownership policies and practices
• Seeking appropriate disclosure on ESG issues by the entities in which are invested
• Promoting acceptance and implementation of the principles within the investment industry
• Working together to enhance effectiveness in implementing the principles
• Reporting on activities and progress towards implementing the principles.

Africa Health Fund makes first investment

Tom Minney — Tue, 19 Jan 2010 14:39:53 +0000

The Africa Health Fund, managed by private equity fund manager Aureos Capital (www.aureos.com) has made its first investment, acquiring a stake in the Nairobi Women’s Hospital (www.nwch.co.ke) for US$2.66 million. This is the first investment by the fund which was launched in June 2009 and aims to raise $100 million, with a final close this year (2010).
The fund is backed by International Finance Corporation (www.ifc.org), African Development Bank (www.afdb.org), DEG (Deutsche Investitions- und Entwicklungsgesellschaft mbH – www.deginvest.de, part of KfW banking group) and Bill & Melinda Gates Foundation (www.gatesfoundation.org). Together they have invested $57 mln. Aureos specialises in investing in small to medium-sized businesses in emerging markets.
The objective of the Africa Health Fund is to increase access to, affordability and quality of health-related goods and services for Africans, especially those at the bottom of the income pyramid. At the same time it hopes to provide investors with good long-term financial returns.
Nairobi Women’s Hospital provides health care services for women and children. It focuses on providing in-patient, out-patient and specialized services for women, including antenatal, gynaecology, obstetrics, breast cancer detection and surgery. Its Gender Violence Recovery Centre is believed to be the first in East Africa.
A proportion of the sum invested in NWH will be used to help fund a management buyout, with the balance going to the expansion of facilities such as clinics, beds, ambulances and operating theatres in the East Africa Region.
Sev Vettivetpillai, CEO of UK-based Aureos Advisers says: “Whilst we were setting up a unique HIV/AIDS risk management programme for our East African portfolio companies in 2008 we started to realise just how fragmented and under-capitalized the healthcare sector is in Africa.
“Many of the causes of the high costs and inefficiencies of the healthcare sector in Africa are essentially business issues that we hope the Fund, and the input of Aureos executives, will help to resolve.
“We believe the Africa Health Fund will make a valuable contribution to helping low-income Africans get access to affordable, high-quality healthcare services whilst at the same time providing satisfactory returns to our investors.
“Through the Africa Health Fund, we look forward to helping populate Africa’s private healthcare sector with growing, profitable businesses, well positioned to attract further domestic and foreign investment.

Healthcare in Africa and private equity

An IFC study “The Business of Health in Africa” finds that private sources fund 60% of healthcare financing in Africa and about 50% of total health expenditure goes to private providers. The report says that “the vast majority of the region’s poor people, both urban and rural, rely on private healthcare.”
Davinder Sikand, Regional Managing Partner of Aureos in Africa says: “The provision of capital to SMEs operating in the health sector in conjunction with professional private equity support will certainly increase the efficiency of the African health market. Aureos is well aware of the effects that health issues and under-resourced health services have on businesses because we work very closely with our investee companies. The economic, productive and emotional cost of workforces in poor health can be devastating on businesses. We have regularly helped our investee companies to devise remedial strategies.”
In 2007, Aureos wIth support from Norwegian Investment Fund for Developing Countries (www.norfund.no) did an analysis of healthcare provision in East Africa, including where the critical deficiencies in the African healthcare system lie. Given its extensive experience working with dynamic SMEs in emerging markets, Aureos identified how SMEs can plug the gaps in the African health market.
The Aureos study showed that much of the African healthcare sector suffers from severe structural and systemic bottlenecks. There is severe market fragmentation; inadequate, inefficient distribution channels; high manufacturing costs; price distortions in the market; lack of effective supply chains; absence of economies of scale; low productivity levels; and, in many cases, dependence on large international health providers.
Aureos researched the structure and segmentation of the African healthcare market. In doing so, it has determined trends in consumer demand, appropriate product pricing and market gaps which suggest investment opportunities. It identified market failures as well as the scope of the distribution chains as challenges in the environment. In drafting the strategy of deploying the Africa Health Fund, Aureos expects to work in innovative new partnerships with public and private organizations, entrepreneurs as well as domestic and international regulators.
Davinder Sikand adds: “We are very well placed to support solutions to the issues we have come to understand in the African healthcare market. Having worked in emerging markets for almost two decades, Aureos understands how production facilities, distribution systems and networks can be mobilized to reach under-served and low-income groups. This particularly applies in domains vital to healthcare, such as healthcare financing, medical manufacturing, healthcare training, telemedicine and pharmaceutical manufacturing.”

Agri-Vie fund close to $100 million target, finding projects

Tom Minney — Tue, 19 Jan 2010 12:37:08 +0000

Agricultural private equity fund Agri-Vie (www.agrivie.com) will reach its target of raising $100 million for investment in agricultural projects by February or March, according to an interview with Reuters newsagency on 14 January. It says there is plenty of potential and plans a second fund of up to $300 million.
Earlier in January the fund, launched in March 2008, made 2 investments totalling $10 mln in 2 agricultural projects in Ethiopia and across the region, and it is close to finalizing a $4 mln investment in Tanzania.
Izak Strauss, executive director and chief investment officer, told Reuters they are also considering a second fund: “There is definitely an opportunity to do a second fund substantially larger than the first fund… probably (in the region of) $200 to $300 million.” This could launch in 2013 or 2014.
Agri-Vie, based in Cape Town, focuses on equity investments in a wide range of agribusiness in Sub-Saharan Africa, including processing and distribution. It is backed by the Development Bank of Southern Africa (www.dbsa.org) and private entities including W.K. Kellogg Foundation (www.wkkf.org).
Agriculture in Africa appears set for transformation from unproductive and undeveloped subsistence farming to more commercial farming as investors from Europe, Asia and the Middle East get large tracts of land and launch projects, often to tackle food insecurity in their own countries.
In the interview, Mr Strauss said Agri-Vie plans to invest up to $25 million into five new projects during 2010, including a new $4 million eco-tourism project in Tanzania.
Agri-Vie forecasts fast economic growth in East Africa, which it calls an “investment hotspot”.
He said Agri-Vie this month invested $6.7 million in New Forests Company (www.newforestscompany.com), a UK-based sustainable and socially responsible forestry company with established, rapidly growing plantations and prospects of diversified products for local and regional export markets. It has operations in Uganda as well as Tanzania, Rwanda and Mozambique. East Africa has been a net importer of sawn timber and electrical poles and NFC aims to replace these imports with locally-produced goods. NFC’s overall aim is to “deliver both attractive returns to investors and significant social and environmental benefits”, according to its website.
The company also invested $3.5 million in africaJUICE (www.africajuice.com), run by European and African entrepreneurs and establishing fruit production and processing operations to capture share in European and the Middle Eastern juice markets. The first farm is in Upper Awash in the Oromia region. africaJUICE claims the combination of ideal growing conditions in the area and Ethiopia’s closeness to target markets should help displace European companies’ reliance on importing fruit products from South America.
The company website says: “We plan to establish at least three production locations across Africa by 2014 and become a premier supplier of Fair Trade juice to the European market.”
Strauss said: “Its first operation is in Ethiopia, growing yellow passion fruit, mango and papaya… The first exports will happen from mid-this year.” africaJUICE is making a capital investment of some €12 million to rehabilitate and expand an existing state-owned fruit farm (“Tibila Farm”) to create a high-technology modern tropical fruit plantation and build a new processing facility, operating under Fair Trade principles.
According to africaJUICE’s website: “Our plan is to plant approximately 600 hectares of yellow passion fruit and 600 hectares of other tropical fruits such as mango and papaya over a period of four years. At the same time we will support the development of over 1,200 hectares of outgrowers (contract farmers) to supplement the supply and extend community participation. Our new fruit processing facility will produce pure juices, concentrates and purees which will be transported to market via established export routes.”
David O’Halloran, Director of africaJUICE, told African Capital Markets News: “Having started operations on the ground early in 2009, we are pleased with the progress so far on the new fruit plantings, infrastructure, operating approach and the processing plant and looking forward to juice production from mid-2010 onwards. We have also made substantial progress following our sustainable development philosophy with a number of initiatives underway or already executed and are excited that this new approach to development and investment is progressing well. We are also progressing well on the second and third projects and expect to be considering funding options for those in the coming 12-24 months”.

First African carbon credit scheme since Copenhagen

Tom Minney — Wed, 06 Jan 2010 10:16:43 +0000

South Africa’s Nedbank (www.nedbank.co.za) has announced an agreement with international non-governmental organisation Wildlife Works Incorporated (www.wildlifeworks.com) to launch an African carbon credit scheme.
Nedbank is to acquire carbon credits which stem from Wildlife Works’ efforts sustainably to prevent the deforestation of the Kasigau Corridor. The project will monetize the biodiversity assets of a 200,000 hectares dryland forest and savannah grassland strip called Kasigau Wildlife Corridor until 2026. It was awarded gold-level approval under the Climate Community and Biodiversity Alliance’s forestry protection standard and is apparently Africa’s first approved large project under the international Reduced Emissions from Deforestation and Degradation (REDD) scheme, which pays for projects which prevent further deforestation sustainably and measurably in areas which has seen previous deforestation. It is seeking registration with the Voluntary Carbon Standard registry. Business and people in developed countries can “off-set” carbon emissions through buying carbon credits from developing countries, which are preventing deforestation and conserving their natural resources and helping the world climate.
Over 2.5 million tonnes of carbon is expected to be released into the global carbon trading market through the Kenyan REDD carbon project partnership. The Kasigau project applies market-based solutions to conservation of biodiversity and should benefit local communities through education, job creation, environmental protection and direct financial rewards.
The investment banking division Nedbank Capital will make the Kagisau credits available. Head of carbon, Kevin Whitfield, reportedly says: “The carbon market provides a mechanism for linking Africa to the global green economy, while simultaneously conserving its rich natural heritage and safeguarding the livelihoods of its people. We hope this partnership will prove Africa can fight climate change, uplifting both rural communities and protecting wildlife by connecting them to the global carbon market.”
Saliem Fakir, Head of the WWF in South Africa reportedly confirms: “Rukinga and the associated Kasigau Wildlife Corridor project are world-class examples of projects that are making a tangible difference to both communities and the environment. It is innovative finance solutions, like carbon financing, which makes them possible.”
Wildlife Works applies innovative market-based techniques to conserving biodiversity and forest habitat. It sees the emerging Global Carbon Marketplace as a logical and exciting extension and its website gives a useful rundown of the theory (How It Works). According to WW, the Rukinga community was being forced to destroy their magnificent wilderness in order to survive. In the last ten years WW has restored a huge piece of land to a healthy vibrant ecosystem with elephants, lions, and 50 other species of large mammal. At the same time, the community has received 18 new classrooms for their children, and the employees and their families have received full health care benefits in a community with incredibly high HIV incidence. Wildlife Works also provides jobs, including through founding an organic greenhouse to promote healthier farming practices, providing local farmers with cash-generating citrus trees and free agroforestry trees to use for building and fuel wood. WW is exploring the extensive and expensive preparation for a new REDD project to save the Ngoyla-Mintom Rainforest (2 million acres) in Cameroon from being logged.
Wildlife Works Carbon is a new joint venture between Wildlife Works and Colin Wiel Investments LLC formed to pursue the emerging Reduced Emissions From Deforestation and Degradation (REDD) marketplace for Carbon Offsets as a sustainable and scaleable funding mechanism for biodiverse forest protection.
Nedbank, a subsidiary of the Old Mutual Group, is one of South Africa’s oldest banks and listed on the JSE Ltd. since 1969. The project further boosts the bank’s “green” credentials after the bank announced in October that it had won the National Business Initiative (NBi) 2009 South Africa Carbon Disclosure Project (CDP) Report Leadership Index. Other leading corporates included Bidvest Group, Woolworths Holdings, BHP Billiton, Goldfields and Sappi. It is also reportedly the only African bank included in the Dow Jones Sustainability Index.
The Global CDP is the largest source of transparent information on carbon emissions in the world. Nedbank is moving towards becoming carbon neutral and is cutting its “carbon footprint” through a robust entrenched carbon management programme including awareness, energy efficiency targets, paper and waste reduction initiatives, travel reduction, and various other methods of internal carbon reduction. Tom Boardman, Chief Executive, Nedbank Group, says: “Our position as a truly environmentally aware organisation is not the result of ad hoc environmental interventions. Rather, the external realization of our green credentials is the natural consequence of a deeply ingrained commitment to a culture of sustainability – one that runs throughout our operations and is embraced as a value by our staff members, business partners, suppliers and other stakeholders.
“Nedbank is serious about influencing others to follow our lead, by linking environmental considerations to all our financing activities, an aggressive green procurement policy that encourages suppliers to operate in an environmentally friendly manner, and a Green Affinity that raises awareness among our clients of the need to be environmentally aware and affords them the opportunity to contribute towards conservation projects simply by utilising affinity-linked Nedbank products.”